In re: Semcrude — bankruptcy — affirmance — Ambro
Is there a judge alive who does a better job of explaining complex business disputes than Judge Ambro? I’m not aware of any. The latest example comes today in the Third Circuit’s opinion affirming summary judgment in favor of one group of companies over another in a giant Chapter 11 bankruptcy case. Here’s the introduction:
Appellants, who are oil producers, sold their product to SemGroup L.P. and affiliates (including SemCrude L.P.), midstream oil and gas service providers and the Debtors in the underlying Chapter 11 cases. SemGroup sold oil to and traded oil futures with Appellees, downstream oil purchasers. The producers took no actions to protect themselves in case of SemGroup’s insolvency. The downstream purchasers did; in the case of default, they could set off the amount they owed SemGroup for oil by the amount SemGroup would owe them for the value of the outstanding futures trades. Accordingly, when SemGroup filed for bankruptcy, the downstream purchasers were paid in full while the oil producers were paid only in part.
Because the oil producers did not take precautionary measures to ensure payment in case of SemGroup’s insolvency, all they have to rely on are local laws they contend give them automatically perfected security interests or trust rights in the oil that ended up in the hands of the downstream purchasers. But the parties who took precautions against insolvency do not act as insurers to those who took none. Accordingly, we affirm the grant of summary judgment in the downstream purchasers’ favor.
Joining Ambro were Jordan and Fisher. Arguing counsel were Lewis LeClair of Texas for the producers, Thomas Moloney of Cleary Gottleib for J. Aron, David Zalman of New York for BP Oil Supply, and Hartley Martyn of Ohio for IC Co.
Also, I noticed today that earlier this week the Third Circuit issued its amended opinion in US v. Stimler, after entering an order noting the existence of factual errors in the original opinion. The new opinion is here, and I’ve updated my original post accordingly. Today, the court entered an order amending the amended opinion to correct a misspelling of Justice Blackmun’s name, but today’s order lists the wrong counsel at the bottom.
Now I wonder if the court will enter an order amending its order amending the amended opinion.